Leonid Nikitinsky

21 November 2024

The Duma has adopted in the first reading a law on special rouble accounts to be held by ‘foreign agents.’ The fine print, however, failed to account for a fatal miscalculation

by Leonid Nikitinsky 

Source: Novaya gazeta

The bill announced on 6 November by Vyacheslav Volodin concerning special rouble accounts to be held by ‘foreign agents’ for receipt of payments for use of their creative work, was passed in the first reading on 20 November. Yet it did nothing to dispel the confusion we wrote about on the Novaya gazeta website, when the law initially appeared in the State Duma database on 15^th November. 

In its latest news section, the Duma states: “foreign agents may no longer enrich themselves at the expense of the country or its citizens. Funds will be credited to a special rouble account, the opening of which will be mandatory for foreign agents or those paying them fees. “Use of these will be possible only following the annulment of the corresponding status.” (italics, mine. – L. N.). Volodin also continues to maintain this. 

The Duma’s press office rather proudly reports that introduction of the bill was supported by 429 deputies out of the 450 listed. Did not one of them notice the contradiction in the explanatory note, in which it states that “in order to manage funds from a special account, a foreign agent must be removed from the register,” and a bill that does not contain any such restrictions on the use of funds from these accounts? 

A newspaper, publishing house, philharmonic, gallery or the like will, pursuant to this law, not only have to pay a royalty fee for the use of works and publications, it will also be obligated to open, on behalf of the author, a special account, if for some reason (such as living abroad) the individual in question is unable or unwilling to do it themselves. The obligation to pay royalties enters into force once the terms of the contract are fulfilled by the author (here we’re talking primarily about contracts that have already been concluded and executed). The right of ownership on any funds received to any “special” account, and therefore the right to dispose of them, enters into force the moment at which the funds are credited to the account. 

The presence in the explanatory note of a reference on the need to first remove all “foreign agents” from the list indicates that this issue was present in some form or another in the draft right from the beginning. And given it was Volodin himself who promised it, it is bound to reappear in amendments to the second reading. 

Yet from a legal perspective, it is impossible to even imagine what could be conceived here. Article 35 of the Constitution clearly states: “Everyone has the right to own property, to possess, use and dispose of it, both individually and jointly with other persons. No one may be dispossessed of their property by any means other than a court decision.” 

Clause 20 of the bill, which proposes to supplement Article 9 of Federal Law No. 255 from 14 July 2022 “On Control over the Activities of Persons Under Foreign Influence”, stipulates that “the writing-off of funds from a special account for the obligations of a “foreign agent” is permitted by a court decision on the recovery of these funds into the budgetary system of the Russian Federation and in other cases established by the Government of the Russian Federation. The procedure for writing off funds is determined by the Government of the Russian Federation ” (italics, mine – L. N.).

What is highlighted in italics may indicate the implicit wish of the legislator, namely that of the State Duma, the Federation Council, and the president who signs the law,

“To shift the entire burden of lawlessness onto the government and the Central Bank, which will then have to issue instructions concerning the notorious special accounts. But at this level, only technical barriers can be created, and even then, only for those who are afraid or cannot enter Russia.”

Some practising lawyers, with whom we discussed this issue, believe that the ban on withdrawing funds from special accounts “stems” from a comparison of the articles of the bill. It may be obvious to them, but in relation to subjects of copyright and property rights, the principle of “everything that is not prohibited is permitted” applies. Volodin’s rhetoric about the inadmissibility of “enrichment at the expense of the country” is also false: authors of works “enrich” themselves at the expense of specific counterparties under agreements on the use of the work; maintaining they do so at the expense of “the country” is far-fetched.

This example illustrates the fact that civil law cannot be manipulated as freely by comparison with how the Duma has succeeded in doing so with administrative or criminal law. Its formulations do not allow for ambiguity, they having been elaborated over the course of almost two thousand years, starting with Roman law.

However, the mechanism of taking away property from the “slanderers”, whatever it may consist of, will ensure their accounts are frozen for a year or two, while the Constitutional Court will drag its feet in accepting and considering applications from “agents” willing to play along with the charade. As to what the political climate will be like in two years, no one can possibly know today.

Translated by Nathalie Wilson